Under Illinois law, virtually any property that either spouse acquires during a marriage is considered marital property, which means that it is subject to being divided between the spouses if they ever get divorced. Such property usually includes wages from your job, even if the money was invested or deposited in a retirement account established in just one spouse’s name. This is also true for a vested pension plan because the value of a pension is based on the efforts of the working spouse, which, according to Illinois law, makes an asset part of the marital estate.
How Much of Your Savings Is Marital Property?
It is not uncommon for a working person to put away savings for retirement over the course of many years. As such, your retirement savings, including any funds in an Individual Retirement Account (IRA) or 401(k), may have started well before you even considered getting married. Any contributions that you made — as well as the increase in the value of your savings — before your marriage are considered non-marital property and are not subject to division. Contributions and value increases that occurred while you were married, however, are marital property, which means that they must be taken into consideration in the asset division process.
As your divorce proceedings get underway, it is a good idea for you and your lawyer to discuss your retirement savings with a qualified financial professional with experience in this type of matter. He or she can help you determine the marital and non-marital portions of your retirement savings, along with an accurate valuation of each portion. Depending on the situation, it might be possible for you to keep the full balance of your retirement savings, but to do so, you will need to offset their value by giving other assets to your soon-to-be ex-spouse.
A QDRO May Be Necessary
If you and your spouse agree to divide your retirement savings — or the court forces you to do so — there are several options for dividing them. One option is to roll over your spouse’s portion to a new or separate account. This option might not be available in all situations, but if you can do so, it will eliminate possible confusion over future disbursements. On the other hand, you could allow your accounts to remain intact with plans for allocating the appropriate portions when you or your spouse reach retirement age. This option will require a Qualified Domestic Relations Order or QDRO to be drafted and approved by the court. A QDRO is a legally enforceable court order that directs a plan administrator to make disbursements from your retirement account in accordance with the terms of your divorce settlement.
A St. Charles Asset Division Lawyer Can Help
When you are facing the possibility of a divorce, there are likely to be many complex issues for you to address, including how to divide your retirement savings. The good news is that the team at Goostree Law Group is here to help. Contact one of our experienced Kane County divorce attorneys to get the guidance you need today. Call 630-584-4800 for a free consultation and case review.